Tag: economic growth

A 2016 research focused on economically powerful countries like the United States and Japan has revealed a significant relationship between demographic changes and the trend of economic growth. The study further suggests that the dramatic shift towards an aging population can possibly lead to a decreasing GDP growth over the next decades.

The question of whether or not demography affects the economy is not a new one. The fact that economic growth greatly depends on productivity gains is a clear indication that the increase or decrease in workforce population can have a significant effect on a country’s economic output.

However, it’s important to point out that the effect of population growth can either be positive or negative depending on the circumstances. For countries with a large population, stable workforce and enough resources, the number can be a huge asset for economic growth. On the other hand, nations with a larger population, limited resources coupled with a high unemployment rate will tell a different story.

The effect of an aging workforce

Demographics, as some economists conclude, is the hardest to overcome among a list of factors that affects growth not only in the U.S. but also in other countries with a steadily and slowly declining working-age population.